Root, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered in this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2024. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the U.S. Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2024, our internal control over financial reporting was effective. Deloitte & Touche LLP, an independent registered public accounting firm, has audited the consolidated financial statements contained in this Annual Report on Form 10-K, and has issued an attestation report on the effectiveness of our internal controls over financial reporting, which is included below. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rule 13a-15(d) or 15d-15(d) of the Exchange Act during the fiscal period ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 135 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Root, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Root, Inc. and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated February 26, 2025, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 136 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP Columbus, Ohio February 26, 2025 137 Item 9B. Other Information Rule 10b5-1 Trading Arrangements On December 13, 2024 , Alexander Timm , the Company’s Chairman of the Board and Chief Executive Officer , entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (a “10b5-1 Plan”). Mr. Timm’s 10b5-1 Plan provides for the potential sale of up to 147,652 shares of Class A common stock and terminates no later than March 13, 2026 . On December 13, 2024 , Mahtiyar Bonakdarpour , the Company’s President and Chief Technology Officer , entered into a 10b5-1 Plan. Mr. Bonakdarpour’s 10b5-1 Plan provides for the potential sale of up to 61,211 shares of Class A common stock and terminates no later than March 13, 2026 . On December 13, 2024 , Douglas Ulman , a member of the Company’s Board of Directors , entered into a 10b5-1 Plan. Mr. Ulman’s 10b5-1 Plan provides for the potential sale of up to 7,000 shares of Class A common stock and terminates no later than March 13, 2026 . 138 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 139 PART III. Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item is incorporated by reference in the definitive proxy statement for our Annual Meeting of Stockholders to be held on or about June 4, 2025. This proxy statement is referred to in this report as the 2025 Proxy Statement. We will provide disclosure of delinquent Section 16(a) reports, if any, in our Proxy Statement in a section entitled “Delinquent Section 16(a) Reports,” and such disclosure, if any, is incorporated herein by reference. We have adopted the Amended and Restated Insider Trading Policy governing the purchase or sale of our securities by our officers, employees and members of the Board of Directors, as well as designated consultants, and have implemented procedures that we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations, and the listing standards of The Nasdaq Stock Market. A copy of the Amended and Restated Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. 140 Item 11. Executive Compensation The information required by this Item is incorporated by reference in the 2025 Proxy Statement. 141 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item is incorporated by reference in the 2025 Proxy Statement. 142 Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item is incorporated by reference in the 2025 Proxy Statement. 143 Item 14. Principal Accountant Fees and Services The information required by this Item is incorporated by reference in the 2025 Proxy Statement. 144 PART IV. Item 15. Exhibits and Financial Statement Schedules (a) Financial Statements and Schedules. See Index to the Consolidated Financial Statements and Schedules on page 87 . (b) Exhibits. Exhibit Number Description of Exhibit Form SEC File Number Exhibit Filing Date Filed Herewith 3.1 Amended and Restated Certificate of Incorporation of Root, Inc. 8-K 001-39568 3.1 October 30, 2020 3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of Root, Inc. 8-K 001-39658 3.1 August 15, 2022 3.3 Amended and Restated Bylaws of Root, Inc. 10-K 001-39658 3.3 February 22, 2023 3.4 Certificate of Designations of Series A Preferred Stock, filed with the Delaware Secretary of State on October 1, 2021 8-K 001-39658 3.1 October 1, 2021 4.1 Form of Class A common stock certificate. S-1/A 333-249332 4.1 October 20, 2020 4.2 Description of Securities 10-K 001-39658 4.2 February 21, 2024 4.3 Common Stock Purchase Warrants, dated as of October 1, 2021, by and between Root, Inc. and Carvana Group, LLC 8-K 001-39658 4.1 October 1, 2021 4.4 Form of Common Stock Purchase Warrant (Tranche 1), dated January 26, 2022 8-K 001-39658 4.1 January 27, 2022 4.5 First Amendment to Form of Common Stock Purchase Warrant (Tranche 1), dated October 29, 2024 10-Q 001-39658 4.5 October 30, 2024 10.1# Root, Inc. 2020 Employee Stock Purchase Plan. S-8 333-256076 99.2 May 13, 2021 10.2# First Amendment to 2020 Employee Stock Purchase Plan 10-Q 001-39658 10.1 November 9, 2022 10.3# Root, Inc. 2020 Equity Incentive Plan. 10-Q 001-39658 10.1 December 2, 2020 10.4# First Amendment to 2020 Equity Incentive Plan 10-Q 001-39658 10.2 November 9, 2022 10.5# Root, Inc. Amended and Restated 2015 Equity Incentive Plan. S-1 333-249332 10.1 October 5, 2020 10.6# First Amendment to 2015 Amended and Restated Equity Incentive Plan 10-Q 001-39658 10.3 November 9, 2022 10.7# Offer Letter by and between Root, Inc. and Alexander Timm, dated January 4, 2021. 10-K 001-39658 10.16 March 4, 2021 10.8# First Amendment to Offer Letter by and between Root, Inc. and Alexander Timm, dated February 22, 2022 10-K 001-39658 10.26 February 23, 2022 10.9# Executive Employment Agreement with Matt Bonakdarpour 10-Q 001-39658 10.2 August 8, 2022 145 10.10# Form of Stock Option Agreement under the Amended and Restated 2015 Equity Incentive Plan. S-1 333-249332 10.2 October 5, 2020 10.11# Form of Notice of Stock Option Exercise and Stock Option Exercise Agreement under the Amended and Restated 2015 Equity Incentive Plan. 10-K 001-39658 10.7 March 4, 2021 10.12# Form of Root, Inc. 2020 Equity Incentive Plan RSU Award Grant Notice and Award Agreement 10-Q 001-39658 10.2 May 6, 2021 10.13# Form of Root, Inc. 2020 Equity Incentive Plan Stock Option Grant Notice and Option Agreement 10-Q 001-39658 10.1 August 12, 2021 10.14# Form of Director and Officer Indemnity Agreement 10-K 001-39658 10.22 February 23, 2022 10.15# Form of RSU Agreement under the Amended and Restated 2015 Equity Incentive Plan. S-1 333-249332 10.4 October 5, 2020 10.16* Term Loan Agreement, dated as of January 26, 2022, by and among the Company, Caret Holdings, Inc., as borrower, the loan parties party thereto and Acquiom Agency Services LLC, as the administrative agent for the lenders party thereto 10-Q 001-39658 10.1 May 4, 2022 10.17* Commercial Agreement, dated as of October 1, 2021 8-K 001-39658 10.1 October 1, 2021 10.18* First Amendment to Carvana Commercial Agreement, dated as of May 13, 2022 10-Q 001-39658 10.3 August 8, 2022 10.19 Investment Agreement, dated as of August 11, 2021, by and between Root, Inc. and Carvana Group, LLC 8-K 001-39658 10.1 August 12, 2021 10.20 First Amendment to Investment Agreement, dated as of September 29, 2021, by and between Root, Inc. and Carvana Group, LLC 8-K 001-39658 10.3 October 1, 2021 10.21 Fifth Amended and Restated Investors’ Rights Agreement by and among Root, Inc. and certain of its stockholders, dated November 25, 2019. S-1 333-249332 4.2 October 5, 2020 10.22 Amendment to the Fifth Amended and Restated Investors’ Rights Agreement by and among Root, Inc. and certain of its stockholders, dated October 28, 2020 10-K 001-39658 10.5 February 23, 2022 10.23 Registration Rights Agreement, dated January 26, 2022, by and between the Company and the other parties thereto. 8-K 001-39658 10.3 January 27, 2022 10.24# Executive Employment Agreement with Megan Binkley 8-K 001-39658 10.1 March 1, 2023 10.25# Executive Retention Agreement between Matt Bonakdarpour and Root, Inc. dated August 9, 2023 8-K 001-39658 10.1 August 11, 2023 10.26# Performance-Based RSU Award Grant Notice 10-Q 001-39658 10.2 November 1, 2023 146 10.27# Root, Inc. Non-Employee Director Compensation Policy adopted October 23, 2023 8-K 001-39658 10.1 October 26, 2023 10.28# 2024 Short-Term Incentive Plan X 10.29 First Amendment to Term Loan Agreement, dated September 17, 2024, by and among the Company, Caret Holdings, Inc., as borrower, the loan parties party thereto and Acquiom Agency Services LLC, as the administrative agent for the lenders party thereto 10-Q 001-39658 10.1 October 30, 2024 10.30* Second Amendment to Term Loan Agreement, dated October 29, 2024, by and among the Company, Caret Holdings, Inc., as borrower, the loan parties party thereto and Acquiom Agency Services LLC, as the administrative agent for the lenders party thereto 10-Q 001-39658 10.2 October 30, 2024 10.31 Amended and restated Board Observation Side Letter 10-Q 001-39658 10.3 October 30, 2024 10.32# Form of Root, Inc. 2020 Equity Incentive Plan Performance-Based RSU Award Grant Notice and Agreement (2024 Grant) 8-K 001-39658 10.1 November 15, 2024 10.33# Form of Root, Inc. 2020 Equity Incentive Plan Performance-Based RSU Award Grant Notice and Agreement Retirement-Eligible (2024 Grant) 8-K 001-39658 10.2 November 15, 2024 10.34# Executive Employment Agreement with Jon Allison X 19.1 Amended and Restated Ins ider Trading Policy X 21.1 List of subsidiaries of Root, Inc. X 23.1 Consent of Deloitte & Touche LLP. X 24.1 Power of Attorney (incorporated by reference to the signature pages of this Annual Report on Form 10-K). X 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1† Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 97.1 Root, Inc. Compensation Recovery Policy X 147 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). _______________ * Schedules and exhibits to this Exhibit omitted pursuant to Regulation S-K Item 601(a)(5) and (b)(10). The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. # Indicates management contract or compensatory plan. † The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates them by reference. 148 Item 16. Form 10-K Summary None. 149 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized . Date: February 26, 2025 ROOT, INC. By: /s/Alexander Timm Alexander Timm Chief Executive Officer and Director POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alexander Timm, Megan Binkley and Ryan Forish, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and either of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Signature Title Date /s/ Alexander Timm Chief Executive Officer and Director ( Principal Executive Officer ) February 26, 2025 Alexander Timm /s/ Megan Binkley Chief Financial Officer ( Principal Financial Officer ) February 26, 2025 Megan Binkley /s/ Ryan Forish Chief Accounting Officer ( Principal Accounting Officer ) February 26, 2025 Ryan Forish /s/ Doug Ulman Director February 26, 2025 Doug Ulman /s/ Jerri DeVard Director February 26, 2025 Jerri DeVard /s/ Larry Hilsheimer Director February 26, 2025 Larry Hilsheimer /s/ Beth Birnbaum Director February 26, 2025 Beth Birnbaum /s/ Nancy Kramer Director February 26, 2025 Nancy Kramer /s/ Julie Szudarek Director February 26, 2025 Julie Szudarek /s/ Donna Dorsey Director February 26, 2025 Donna Dorsey